ARMS LENGTH PRICE

No exhaustive and compact definition of the phrase ‘transfer pricing’ is possible nor has it been attempted in the legislations in the countries that have tried to find solutions to this menace. When transfers by way of sales exchange, etc. are made between two independent entities unconnected with each other as normal business deals, there can hardly be any scope of alleging any malpractice or hidden motives in price fixation. Full Article

Delmas, France vs. ADIT (ITAT Mumbai) - Scope of dependent agent permanent establishment (DAPE) is set out in Article 5(5) and Article 5(6) of the Indo French DTAA. Article 5(5) provides the situations in which business being carried on through a dependent agent results in creation of PE in the source state. The provisions of Article [...] Full Article

The assessee is not entitled to adjustment of 5 per cent as stipulated u/s 92C(2), where only one of the several methods specified u/s 92C(1) is applied by the assessee to determine the arm’s length price Full Article

During the year, the assessee has shown export sale of polished diamonds and claimed deduction u/s. 80HHC. The assessee also filed an Audit Report in the Form No. 3CEB. The Assessing Officer referred the case to the Transfer Pricing Officer (TPO) for determination of Arms Length Price (ALP) u/s. 92CA(3). The assessee contended before the TPO that, for the purpose of benchmarking the assesse's international transactions, none of the methods prescribed under the income .. Full Article

In a recent decision, the Federal Court of Australia ("the Court"), in the case of SNF (Australia) Pty. Ltd. v. Commissioner of Taxation [2010] FCA 635 ,ruled in favour of the taxpayer acceding to the approach of direct transactional (price) comparisons (i.e., use of Comparable Uncontrolled Price Method) adopted by the taxpayer, and rejecting the profit-based analysis (using Transaction Net Margin Method) suggested by the Commissioner of Taxation ("the Commissioner") for.. Full Article

The Mumbai Bench of the Income Tax Appellate Tribunal ('the Tribunal'), in the case of ITO v. Zydus Altana Healthcare Pvt. Ltd. [2010-TI I-29-ITAT–MUM-TP], while deciding the case in favour of the assessee, ruled that the determination of arm's length price should be based on the functional and asset profile of a company and profit margins earned by comparable companies should be adjusted for functional differences between the tested party and the comparables. The Trib.. Full Article

In a recent ruling in the case of Nimbus Communications Ltd v. ACIT [2010–TI1-21-ITAT-MUM-T9, the Mumbai Bench of the Income Tax Appellate Tribunal ("the Tribunal"), while deciding the case in favour of the assessee, ruled that for determination the of arms' length price ("ALP"), any one of the methods as prescribed in section 92C(1) of the Income Tax Act, 1961 ("the Act") must be followed. The Tribunal also ruled that levying interest on outstanding trade balances is .. Full Article

The Delhi Bench of Income Tax Appellate Tribunal ("the Tribunal") in its recent ruling in the case of ACIT v. Vedaris Technologies (Pvt.) Ltd [2010-TII-10-ITAT-DEL-TP] has held that selection of comparable uncontrolled transactions ("comparables") for determining arm's length price ("ALP") should be done with reference to Rule 10C(2) of the Income-tax Rules, 1962 ("the Rules"). Full Article